Warsh’s Jackson Hole warning lifts odds of a September Fed rate hike
What’s new: Fed-funds futures moved from about 35% to above 50% for a September increase after the speech.
Federal Reserve Chair Kevin Warsh’s first Jackson Hole speech pushed investors to price in a higher chance of a September rate increase after he warned inflation was not moving clearly enough toward the Fed’s 2% goal. Warsh told policymakers they still had “work to do” unless underlying inflation slowed with sufficient speed, reinforcing a hawkish stance ahead of the Sept. 15-16 meeting. Federal-funds futures lifted the implied odds of a September hike to above 50% from around 35% before the remarks. Wall Street turned lower after the speech, with the S&P 500 down 0.25%, the Nasdaq off 0.52% and the Dow little changed. Analysts said the Aug. 11 CPI report could still shift the decision before the September meeting.